If you fail to file and pay your payroll taxes you will face numerous problems. Unpaid payroll taxes lead to enormous IRS penalties and interest. Failure to pay payroll taxes can lead to a seizure of your business assets and may require you to shut down. Payroll tax problems can affect your freedom to conduct business.
Payroll Tax Problems Can Shut Down A Business
You need to take some steps as early as possible to resolve payroll problems. The penalties accruing for unpaid payroll taxes can more than double within just a few months. It is crucial to take immediate action when dealing with payroll tax problems. Many businesses use their payroll tax withholdings to meet other operating expenses. Business forget or do not realize that the money collected from the employees share of federal tax, Medicare and FICA does not belong to them but rather is the employee’s pay that must be paid to the government.
The IRS is most concerned collecting unpaid payroll taxes. The employees withholding portion of payroll taxes is deemed as the Trust Fund portion. As an employer, it is your duty to collect federal withholding taxes from your employees and pay it to the IRS. Failure to pay the Trust Fund portion of the tax will result that portion being assessed to the Responsible Person/s (a “Responsible Person” is anyone that is a decision maker for the company that could affect how the payroll was dispersed. For example business owners, board members, bookkeepers, accountants, attorneys, everyone on the bank signature card, etc.)
Dodging Payroll Tax Problems Is A No Win Scenario
Penalties for payroll tax problems are much more severe than they are with other tax problems. It is more difficult to negotiate a payroll tax settlement. Long term Installment Agreements are generally not available for owing payroll taxes, because the IRS wants to ensure that the business can pay off the back taxes and continue to pay current payroll taxes. Offers in Compromise are virtually always rejected for unpaid payroll taxes when the company remains in business because they feel that if the business cannot afford their current liability let alone their back payroll taxes.
If you find yourself faced with payroll tax issues pick up the phone or email us at the Tax Resolution Institute. You do not want to waste any more time letting these issues remain unresolved. Time is money…a lot of money in this case.
